Saturday, January 3, 2009

Creative Cuts 2,700 jobs

CREATIVE Technology, the home-grown tech firm, has slashed 2,700 jobs, or almost half its total workforce, in the last fiscal year as falling demand for its products continue to hit its bottom line.

Jobs cuts were made across the board, but the bulk was in manufacturing, due to the sale of its Malaysian plant in July 2007.

The Straits Times estimates that up to 2200 jobs have been eliminated as a result of that closure.

This came to light in the company's annual report filed with the Singapore's Exchange on Wednesday.

In the report, Creative said that it had about 3,100 full-time workers as at June 30 last year, or 47 per cent fewer than the 5,800 employed a year earlier.

In the previous year, Creative had cut headcount by about 800 from 6,600.

A Creative spokesman said: "The bulk of the reduction in the worldwide workforce was due to the sale of Cubic Electronics, the manufacturing subsidiary of Creative in Malaysia, in July 2007."

Creative sold an 80.1 per cent stake in the Malaysian facility for US$6.9 million (S$10.1 million) to a group of third-party investors as part of a move to streamline and improve its operational efficiency.

Other staff cuts were made, with about 250 coming from sales, marketing and customer support, about 180 from administrative and other areas and fewer than 50 from research and development (R&D).

Besides Asia, headcount was also significantly reduced in the Americas region, from about 640 to 280.

The spokesman said there had been no "significant change" in headcount in Singapore, where Creative has its corporate headquarters and a large part of its R&D operations.

"We are still looking to hire more R&D engineers," the spokesman said.

The company employs about 1,100 staff in R&D across the US, Britain and China, in addition to Singapore.

Creative had net losses of US$19.7 million for the year ended June 30, 2008.

The company, which makes MP3 players and speakers, has been hit by slowing sales of its products due to the worsening economic situation and tough competition.

Sales for the three months ended Sept 90 were US$141.2 million, down from US$184.6 million for the same period a year before. Half of Creative's sales came from Europe, while the Americas and Asia made up the rest almost evenly.

In the report, Creative said it faces "intense competition from a large number of established companies and emerging companies".

Sales of electronic products have slumped as the economic slowdown forces consumers to cut back on spending, leading companies like Chartered Semiconductor and Philips Electronics to announce job cuts in the recent months.

Creative suffered a net loss of US$32.2 million in the first quarter ended Sept 30 to follow a net loss of US$31.7 million in the three months before that.

"We will continue to reduce operating expenses as we target to reduce our losses in the uncertain market environment ahead," president and chief operating officer of Creative Labs Craig McHugh said in October.

Thanks to Musik (of epizenter) for the article. Article courtesy of The Straits Times, Singapore and is written by Robin Chan.

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